___risk appetite remains under pressure__

Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission. US ISM non-manufacturing is released at 16:00 CET and we expect the index to be stable at the current level (55.3) suggesting that the service sector continues to grow at a moderate pace. The UK services PMI index (released 10:30 CET) is expected to stay at the current level, suggesting that the moderate growth will continue to be driven by services. Pace of FX intervention by Danish Nationalbank (DN) slowed in January. Data released by DN yesterday showed FX interventions in January

amounting to only DKK7.7bn. Hence, it would seem that upside pressure on EUR/DKK has eased, following the 7 January rate hike. We expect DN to mirror a potential 10bp rate cut from ECB in March, leaving the CD rate at -0.75%. For details, see Denmark: Pace of FX intervention slowed in January, 2 February. Selected Market News This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument.

Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank’s research analysts are not permitted to invest in securities under coverage in their research sector. In Scandi markets, Norwegian unemployment and January housing data will be in focus. Also, Swedish PMI data is due for release. See Scandi Markets.

Risk appetite remains under pressure. Yesterday, US stocks resumed their slide and credit spreads widened as the WTI oil future fell back below USD30/barrel for the first time in two weeks. In terms of economic data, there was no clear trigger for the renewed market weakness. In the US, the only release of interest was auto sales for January, which actually came out better than expected, rising to 17.5m (17.3m expected, 17.2m previous). However, the oil price slump is clearly putting oil companies under pressure.

Yesterday, Exxon Mobile Corp posted its weakest annual results in more than a decade, while BP Plc posted a loss on par with 2010 when the Gulf of Mexico oil spill occurred. Asian bourses take the lead from the weak performance on US and European bourses.

At the time of writing, the Japanese Nikkei index is down 3.5%. Despite further easing measures announced in China yesterday (see China eases further – aimed at ailing construction sector, 2 February) as well as the Caixin Service PMI rising to 52.4 in January (December: 50.2) this morning, Chinese equities are also in red, with the Shanghai Composite currently 1.2% lower. Euro area retail sales for December are due at 11:00 CET and the focus is likely to be on any impact of the lower oil price and continued progress in the labour market.

We expect to see a small monthly increase on the back of the drop in the oil price. Overall, we look for private consumption to continue to be an important driver of the euro area recovery and we expect the very low oil price to have a positive impact in Q1. Fed President Esther George (voter, hawkish) struck a rather optimistic tone, providing no support to risky assets. In her speech she noted that the Fed got a ‘late start’ by raising its interest rate target in December, while noting that the economy stands in a ‘generally good position’ and could support further rate increases with an uptick in activity.

Unlike Fed Vice Chairman Fischer, who spoke on Monday, she did not indicate that recent market trends had led her to reconsider the policy path. This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Legal disclaimer and risk disclosure

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